Having invested an additional Rs 185 crore in Zomato.com, Info Edge shares surged 7 percent, hitting new high of Rs 1014.70 per share intraday on Wednesday. The stock is currently trading at around Rs 960 per share. Info Edge has taken its total investment to Rs 327 crore in Zomato while maintaining shareholding at a little over 50 percent.Speaking to CNBC-TV18, CFO Chintan Thakkar says the investment was made to help Zomato expand its business. The restaurant discovery service incurred losses in the quarter gone by. Thakkar shrugged off the possibility of bringing Zomato to bourses anytime soon.
Other Info Edge portals include Naukri.com, 99acres.com, Jeevansathi.com and shiksha.com.
Going ahead, the company plans to increase investment in 99acres.com. Realty players are eyeing a sector revival on the hope of some big ticket reforms by the Narendra Modi-led government.Info Edge plans to infuse more capital in 99acres.com to improve product quality and user experience. It may be reminded, its peer housing.com also raised money from Japan-based SoftBank, valuing it close to Rs 1,500 crore. Below is verbatim transcript of the interview:
Q: You have made an additional investment in Zomato but Zomato’s losses have widened even though the valuations have soured. Can you just give us an outlook on what the operating performance for Zomato could look like in the next 6-12 months?
A: For Zomato every city is a market. So if you have to analyse their operating margins, you need to go city by city. Once they have entered a market it might take them anything between 12-24 months to get to the part of profit.
The markets which they entered somewhat early particularly in India, in UAE, it is profitable. The loss that you are really seeing is actually the expansion and the growth that is happening in our markets. So now they are in 18 markets.
Q: What is the purpose of raising this money?
A: It is to fund the growth, it is to give them a cushion as they are expanding and it is also a show of confidence in the management team so we are backing them fully.
Q: Are they looking at some inorganic expansions as well?
A: Yes, knowing the management team and knowing what they have done in the past with four acquisitions, I am sure they would not shy away if there are many more in the pipeline.
Q: Is there any listing that is planned eventually by Zomato?
A: Right now there is no plan of listing or exit. We are growing and would continue to grow at this pace. We will look at the options whether it is listing or anything else at a later date.
Q: You have a job index at Naukri, what is the sense you are getting, are more people hiring?
A: Yes. Our job speak index is growing about 15 percent. Certainly, the hiring activities have taken an upswing. We have also seen this hiring activity happening across the sectors, it is not just one-two sectors but it looks like it is kind of a secular trend and it is across all the sectors we are seeing an upswing in the job market.
Q: Would you expect your EBITDA to grow better in the current quarter or in the second half?
A: We have several investments and Naukri is just one part of it. But we are also making more investment now in 99acres as you have seen it in the last quarter and this trend will continue.
We will continue to spend much more in 99acres and our losses in 99acres will certainly go up because of the additional spending that we would be doing. So to that extent the EBITDA might get impacted.
Q: When you say that you are looking to expand Zomato business what do you mean if you could throw some more colour, are you looking to enter into more geographies?
A: Yes. It will enter more geographies and we will also be open to looking at some other acquisitions. It could be for acquiring some technology, acquiring some talents or acquiring market share in other markets.
Q: This no listing point that you spoke about, you aren’t planning to list for now or is that a decision for a slightly longer period?
A: Well it is too early to say anything. Let us keep this discussion for a much later date.
Q: What is the outlook for Info Edge itself as a company? In the quarter gone by your profits were flat at Rs 33 crore but you saw an income growth of about 20 percent. Since you are mentioning that you are seeing a pickup in Naukri, what kind of targets do you have for the end of the year?
A: If the GDP continues to grow the way it is, Naukri, in a way, has grown in past two quarters. We would probably continue to grow in the same range. If GDP grows up at a higher rate we can even see an upside to that.
Having said that, 99acres is where we are continuously going to make investment and our pace of investment in 99acres will grow much more because last quarter we raised Rs 125 million dollars to invest in 99acres so we will continue to invest in 99acres.
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